I
must admit that I am not rich enough to buy products from high end brand such
as Chanel and Louis Vuitton but having recently spent time in China I have
become interested in their relationship with these luxury brands. Louis Vuitton
has recently become China’s favourite luxury brand and the Chinese are their
top customers.
It
has been especially interesting to see how the Chinese have continued to
purchase high end products despite a global financial crisis and a decline in
the ability of the rest of the world to afford such products. It seems that the
Chinese fascination with these products has kept Louis Vuitton in a job and
will continue to do so in the future.
It
has been said by Bain & Co that the Chinese purchases of luxury brands in
2012 has gone up by 31% (although a HSBC reports claims that it is only 25%) while
globally there has been a 7% growth. CLSA, a large investment bank in Asia,
claims that by 2020 China will be responsible for 44% of the purchases of
luxury goods worldwide. Although it is
important to remember the majority of what is purchased by the Chinese is done
overseas. A HSBC report noted that only 10% of purchases are in mainland China.
As
you can see the figures are astounding and this got me thinking of why the
Chinese are responsible for supporting such brands as Louis Voitton and Chanel
when much of the rest of the world is limiting what they spend on products that
are considered extravagant. I am also interested in the impact that this
increase has on Chinese society.
The
reasons for the growth of China’s interest in anything extravagant and opulent
are many and varied but essentially can be seen as an indicator of their own
success.
The
past 20 years dramatic changes in the Chinese economy. Not only are their
manufacturing sector growing to meet the needs of the world technology and
clothing needs but because of the lack of welfare state in China, they are
required to save for
their own retirement and it is this block of saving is that is funding US debt.
But
times are changing. With the opening up of the Chinese economy and the
transition from a planned economy to a market based one, Chinese people are now
choosing to spend their money on goods that they perceive to raise their status
and give them importance in a society where your place in the social ladder is
of great importance.
While
I think there is no doubt that economic progress and the growing Chinese middle
class are good things, the rise of consumerism without any insight into the
effects of such behaviour is a negative side effect of this development.
The
most obvious side effect it the environmental impact of overconsumption. Luxury
items are by their very nature transitory, they are never in vogue (literally)
for very long. As a result, products are brought and then discarded to make way
for the latest model.
Whether
it is luxury goods or technological goods, this culture of just discarding products
because it is out of fashion or there has been a new model released has a great
environmental impact.
The downsides
of China’s interest in luxury items.
There
are social implications of China’s passion for anything luxurious. In a China.org.cn
article on why Chinese love luxury items, Jiao Haiyang
describes what happens when consumerism comes into conflict with traditional
Chinese values. He notes, ‘If the people of a state become materialistic and especially
worship the luxury goods, it will mislead and distort people's value of the
society, increase the psychological imbalance of low-income groups and affect
the social harmony and stability’.
I never really looked
at the consumption of luxury products from this prospective before but it does
make sense that if a society does become too materialist, what society
values such as community spirit, supporting others (especially those who aren’t
well off or those who could not describe as sophisticated, trendy and come
straight from Paris Fashion Week) and cultivating more than just your physical
appearance.
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